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Walmart (WMT) Q4 Earnings Top Estimates on Omnichannel Strength

Walmart Inc. WMT ended fiscal 2024 on a strong note, as the fourth-quarter top and bottom lines increased year over year and beat the Zacks Consensus Estimate. Revenues grew across all segments, and the company’s e-commerce sales surpassed $100 billion in the fiscal year. Walmart continued to gain from the strength of its omnichannel model.

Quarter in Detail

Walmart’s adjusted earnings of $1.80 per share increased 5.3% from the year-ago period’s figure of $1.71. The metric easily beat the Zacks Consensus Estimate of $1.65.

Total revenues of $173.4 billion grew 5.7% year over year and beat the consensus mark of $170.6 billion. Currency movements boosted revenues by $1.3 billion. On a constant-currency (cc) basis, total revenues climbed 4.9%.

E-commerce sales surged 23% globally on pickup and delivery. E-commerce net sales formed 18% of WMT’s overall net sales. Walmart witnessed a solid increase in membership income, alongside experiencing higher transactions in both store and digital channels.

Walmart Inc. Price, Consensus and EPS Surprise

Walmart Inc. price-consensus-eps-surprise-chart | Walmart Inc. Quote

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The consolidated gross profit margin expanded 39 basis points (bps) to 23.3% due to effective pricing and lower markdowns. Adjusted operating expenses deleveraged 16 bps, mainly due to elevated variable pay expenses in the United States.

The adjusted operating income increased 13.2% to $7.3 billion, including positive impacts of 2.3% from currency movements and 1% from LIFO.  

WMT’s global advertising business increased by around 33%.

Segment Details

Walmart U.S.: The segment’s net sales grew 3.4% to $117.6 billion in the reported quarter. The Zacks Consensus Estimate for the segment sales was pegged at approximately $117 billion. U.S. comp sales, excluding fuel, improved by 4% due to transaction growth of 4.3%, partly offset by a 0.3% dip in the average ticket. Sales growth was backed by strength in store and digital transactions, with unit volumes increasing.

WMT witnessed share gains in grocery and general merchandise. However, sales growth was led by grocery and health & wellness, with general merchandise sales decreasing at a modest rate. E-commerce boosted comps by 240 bps. E-commerce sales in the segment rose 17%, driven by strength in pickup & delivery.

As of the fourth quarter, Walmart U.S. had nearly 4,600 pickup locations and more than 4,300 same-day delivery stores. The company remodeled 205 stores during the reported quarter.  The operating income of the Walmart U.S. segment jumped 12.9% to $6.1 billion.

Walmart International: The segment’s net sales rose 17.6% to $32.4 billion. The consensus mark stood at $30.6 billion. Foreign currency movements had a positive impact of $1.3 billion on net sales. On a cc basis, net sales jumped 13%, driven by Walmex, China and Flipkart (especially The Big Billion Days event). During the quarter, Walmart introduced 110 new stores. Segment e-commerce sales soared 44% due to solid marketplace and omnichannel offerings. The operating income, on a cc basis, grew 13.5% to $1.3 billion.

Sam’s Club U.S.: The segment, which comprises membership warehouse clubs, witnessed a net sales increase of 3.3% to $19.4 billion (excluding fuel). Sam’s Club’s comp sales, excluding fuel, grew 3.1%. While transactions grew 3.6%, the average ticket fell 0.4%. Comp sales saw strength in food and consumables as well as growth in unit volumes and transactions.

The membership income climbed 10% in the quarter. The Plus penetration rate continued to rise. E-commerce fueled comps by 190 bps. E-commerce net sales jumped 17% at Sam’s Club U.S. on curbside and delivery strength. The segment’s operating income came in at $0.6 billion, up 20.4% year over year.

Other Financial Updates & Developments

Walmart ended the quarter with cash and cash equivalents of $9.9 billion and total debt of $46.9 billion.

In fiscal 2024, WMT generated operating cash flow of $35.7 billion and free cash flow of $15.1 billion. In fiscal 2025, capital expenditures are likely to form nearly 3-3.5% of net sales.

Walmart repurchased 18.2 million shares for $2.8 billion in fiscal 2024. As of the fourth-quarter earnings release, the company had $16.5 billion remaining under its share buyback plan.

On Jan 30, 2024, management authorized a three-for-one forward split of its common shares and a proportionate rise in the number of authorized shares. Consequently, each shareholder, as of Feb 22, 2024, will receive two extra shares of the common stock, which will be distributed after the closing bell on Feb 23.

In a separate release, management announced a 9% increase in its annual dividend, taking it to 83 cents per share (on a post-split basis) and $2.49 per share (on a pre-split basis). Also, the company inked a deal to buy VIZIO HOLDING CORP., which is likely to strengthen Walmart Connect in the United States.

FY25 Guidance

For fiscal 2025, Walmart expects consolidated net sales growth of 3-4% at cc. Management expects the consolidated operating income to increase roughly 4-6% at cc.

Net interest expenses are likely to escalate by approximately $100-$200 million from the year-ago period.

Walmart envisions an adjusted EPS in the band of $6.70-$7.12 in fiscal 2025 on a pre-split basis. On a post-split basis, the company expects adjusted EPS in the range of $2.23-$2.37. WMT posted an adjusted EPS of $6.65 in fiscal 2024.

Q1 Guidance

For the first quarter of fiscal 2025, the company anticipates consolidated net sales to increase 4-5% at cc, including a nearly 100 bps gain from the leap year. Consolidated operating income is expected to rise 3-4.5% at cc. Management envisions pre-split adjusted EPS in the band of $1.48-$1.56 in the first quarter, while the post-split EPS is expected to come between 49 and 52 cents.

Shares of the Zacks Rank #3 (Hold) company have surged 15.6% in the past year compared with the industry’s growth of 14.3%.

Solid Retail Picks

Here, we have highlighted three better-ranked stocks.

Abercrombie & Fitch ANF, a specialty retailer, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year sales suggests growth of 14.9% from the year-ago reported numbers. ANF has a trailing four-quarter earnings surprise of around 713%, on average.

Costco Wholesale Corporation COST holds a Zacks Rank #2 (Buy) at present. COST, which operates membership warehouse clubs, has a trailing four-quarter earnings surprise of 2.6%, on average.

The Zacks Consensus Estimate for Costco’s current financial-year sales and EPS suggests growth of 4.7% and 6.5%, respectively, from the year-ago reported figure.

Target Corporation TGT, a general merchandise retailer, currently carries a Zacks Rank #2. TGT has a trailing four-quarter earnings surprise of 30.8%, on average.

The Zacks Consensus Estimate for Target’s current financial-year earnings indicates growth of 38.4% from the year-ago reported number.

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Target Corporation (TGT) : Free Stock Analysis Report

Walmart Inc. (WMT) : Free Stock Analysis Report

Abercrombie & Fitch Company (ANF) : Free Stock Analysis Report

Costco Wholesale Corporation (COST) : Free Stock Analysis Report

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